Obama administration makes massive biofuel push

USDA to oversee programs to push biofuels, revitalize rural America.
Will make use of new technologies, new markets.
Will push new research and development, variety of feedstocks.
Five regional biofuel centers planned.

“Revitalize rural America” has been a mantra uttered by the Obama administration almost since its inception. On Thursday morning, Agriculture Secretary Tom Vilsack revealed the centerpiece of that effort to be biofuels.

“The approach at the heart of the President’s vision - which combines new technologies, new markets, and better use of our natural resources - is our nation’s capacity to reduce its dependence on imported oil and fossil fuels through the increased production and use of biofuels and renewable energy,” said Vilsack at the Press Club in Washington, D.C.

The reward for investing in renewable fuels “outweighs the risk associated with the investment. The reward includes less reliance on foreign oil. We won’t have to necessarily spend as much in countries that don’t agree with us or like us.”

Estimates are that by 2035 the United States’ energy consumption will increase by another 50 percent. Further, without changes, statistics show the nation’s appetite for imported oil will remain ravenous. “Thirty years ago, 28 percent of the oil consumed in the United States was imported. Today, that figure is closer to 60 percent.”

Daily, the United States spends $1 billion dollars on oil from “outside our shores helping other countries’ economies to grow while our economy recovers from a deep recession.

“We can do better. We have to do better. Rural America is where we will do better.”

Renewable Fuel Standard

Pushing the biofuels plan is the fact that the Renewable Fuel Standard (RFS) calls for 36 billion gallons of biofuels (including 21 billion gallons of advanced biofuels) be produced by 2022. Currently, the country produces some 12 billion gallons of ethanol and 800 million gallons of biodiesel.

The treasure being spent by the United States on imported oil is needed desperately in rural America. Vilsack said the majority of rural counties lost population in the last census. He expects to see the trend continue when the just-completed census figures are released.

And with lost population, “political representation is lost. As we see an aging population in rural America, as we see as many high school dropouts as college graduates, it gets more and more difficult for (parents) to look at their children and suggest there really is an opportunity” in rural areas.

“I think it’s extraordinary that there may be as many as one million jobs, based on industry projections that could be created in rural America. That’s the kind of activity that will allow us to offer a chance to our kids who do want to stay in small towns, who have an affinity and connection to rural areas.”

E15

The recent EPA announcement authorizing an E15 blend for 2007, or newer, vehicles “will help boost demand, and EPA will make a decision later this year regarding 2001-2006 model vehicles.”

Even so, said Vilsack, it’s time to pick up the pace. He pointed to discontinued incentives as a reason for the recent loss of some 12,000 jobs in the biofuel industry.

“Incentives helped build the biofuel industry and incentives need to continue. Congress should start by reinstating the Biodiesel Production Tax Credit and providing a fiscally responsible short-term extension of the Volumetric Ethanol Excise Tax Credit. At the same time, we need to begin to think about reforms to the ethanol credit program to make it more efficient and effective at addressing the full range of challenges we face in meeting our goals for traditional and next generation biofuels.”

However, “incentives, by themselves, are not enough. Our effort must include identifying additional feed stocks available throughout the country and discovering more efficient production processes. Research and development must intensify.”

Facilities

Towards that goal, five USDA regional Biomass Research Centers will be established for the development of non food biomass feed stocks. Besides ramped up research, the centers “will also assist rural development officials in the development and construction of biorefineries. The lead personnel at the centers will draw on the expertise of the entire USDA team.”

The Northeast center will be located in Madison, Wisconsin, led by the Forest Service.

The Central East Center will be located in Lincoln, Nebraska, led by ARS.

The Southeast center – “a little more complicated because so much is going on there” -- will be located both by ARS in Boonesville, Arkansas; and Tifton, Georgia, and in Auburn, Alabama, led by the Forest Service.

The Western Center will be located in Maricopa, Arizona.

The Northwestern Center will be located in Pullman, Washington, led by ARS, and Corvallis, Oregon, led by the Forest Service.

The 2008 farm bill authorized investments to assist in the construction of new biorefineries. Vilsack said within 60 days the USDA would “announce funding under the current Biorefinery Assistance Program for the construction (to commence in 2011) of a biorefinery or bioenergy plant in each of the regions serviced by the regional centers.”

Vilsack acknowledged one biorefinery per region will hardly be enough. “We need a substantial number of biorefineries over the next 12 years.” Studies show the need ranging “anywhere from a couple hundred to as many as 500.”

Even at the low end, “that’s a substantial capital investment in rural communities, a lot of construction jobs, a lot of jobs making component parts for the facilities, a lot of jobs maintaining the facilities, a lot of opportunities for community colleges to develop courses to understand the (fuel-making) process.”

Programs and feedstocks

Since feedstocks will be needed to produce the fuel, the Biomass Crop Assistance Program will provide producers with assistance “to defray the cost of production, storage and transportation. The assistance could be as much as 75 percent of the cost of establishing the new crop as well as annual rental payments to help cover the costs of transitioning from current cash crops.”

A variety of feedstocks will be needed in order to meet the 36 billion gallon threshold. “It may be woody biomass in one area, perennial grasses in another, crop residue in another, algae in another. We want a whole host (of feedstocks) and diversification. With diversification, you strengthen the capacity of the industry to provide” needed fuel.

Vilsack addressed another common complaint about the reluctance of gas stations to incur the costs of supplying biofuels. To help remedy that, the USDA will provide “financial assistance … to help install 10,000 blender pumps and storage systems over the next five years. Work will commence immediately on putting that program together.”

Why tackle everything en masse? Because there is no choice, said Vilsack.

“It’s a situation where everything has to happen not in a particular sequence but all at once. In other words, you can’t just do additional research on feedstocks and come up with a variety of alternatives to corn-based ethanol and say ‘the problem is solved.’ Because then you have to actually produce it – you have to have biorefineries.

“Well, those biorefineries have to have markets. That means you must be capable of distributing (the fuel) in areas where the biorefinery is located. That means you have to have demand at the gas station for the product.”

Once biorefineries are built, Vilsack is confident, “we’ll see technology being unleashed. I talked to someone yesterday who is very excited about taking woody biomass … and turning it into crude oil. There’s nothing the American innovative spirit can’t do. We just have to unleash and encourage it.”